I can. Sometimes Apple forces a developer to remove a feature. For instance, the Stanza app used to allow transfer over USB. Apple forced the developer to remove the feature. If that were a feature you used, you might not want to update the app.

Likewise, there have been times when app updates have been less than stellar. Quite commonly, apps are updated to include more invasive forms of advertising. Sometimes app updates prove to be buggy, or remove features, as previously noted.

There should be a "skip this update" option, as there is in most auto-updating desktop software.